Reported results of EU agricultural expenditure checks carried out by Member States not reliable, say EU Auditors

A report published today by the European Court of Auditors (ECA) reveals that the results of the checks of agricultural expenditure carried out by Member States and reported to the Commission are not reliable. The Commission uses this information to estimate residual error rates which is presented to the European Parliament and the Council in the context of the discharge procedure.

“The Member States play a key role in ensuring that EU agricultural aid is distributed to beneficiaries in line with EU legislation,” stated Mrs Rasa Budbergytė, the ECA Member responsible for the report. “They must thus provide the Commission with reliable information on the results of their checks in order to allow the Commission to better estimate the impact of irregularities in the payments made”.

The European Commission shares the responsibility for the implementation of the common agricultural policy (CAP) with the Member States. Support for EU farmers is administered and paid out by national or regional paying agencies, which report back to the Commission. Independent certification bodies appointed by the Member States certify to the Commission the reliability of the annual accounts of paying agencies and the quality of the control systems these agencies have put in place.

The paying agencies carry out checks on aid applications from farmers in order to verify their eligibility. They also carry out on-the-spot checks of a sample of applicants. Errors detected through these checks give rise to reductions in the amount of aid that can be paid out to the applicant. Member States annually report the results of these checks to the Commission through statistical reports. These form the building blocks for the Commission’s estimation of a residual error rate which is deemed to represent the financial impact, expressed as a percentage of the amount of payments, of the irregularities in payments made after all checks have been carried out.

The ECA concluded that the Member States’ statistical reports are not reliable due to both compilation errors and the systems for administrative and on-the-spot checks being only partially effective in detecting irregular expenditure. Additionally, the work of the certification bodies does not provide sufficient assurance either on the adequacy of the on-the-spot checks or on the reliability of the statistical reports. Lastly, the EU auditors do not consider the Commission’s adjustments of the error rates resulting from the reports to be statistically valid.

Notes to the editors:

European Court of Auditors (ECA) special reports are published throughout the year, presenting the results of selected audits of specific EU budgetary areas or management topics.

This special report (SR 18/2013) - entitled “The reliability of the results of the Member States’ checks of the agricultural expenditure” – assessed the reliability of the Member States’ statistical reports containing the results of their administrative and on-the-spot checks as well as the statistical validity of the Commission’s residual error rate based on these reports.

This and previous audits by the ECA, as well as the Commission’s audits, show that the systems in place for administrative and on-the-spot checks are only partially effective, thus seriously undermining the reliability of the information Member States provide to the Commission.

The Commission issues guidelines for the compilation of the statistical reports. However, the audit showed that these guidelines are not always correctly implemented. Most paying agencies do not ensure the accuracy of the reports before they are submitted to the Commission.

The ECA also concluded that the work carried out at present by the certification bodies does not provide sufficient assurance either on the adequacy of the on-the-spot checks or on the reliability of the statistical reports. The limited review of Member States’ statistics by the Commission also cannot ensure their reliability.

Because of the weaknesses detailed in the report, the information available to the Commission does not provide it with a reliable basis to estimate the residual error rate. In addition, the Commission’s adjustments of the error rates derived from the statistical reports are not statistically valid nor, as a consequence, is the resultant residual error rate.

Based on its findings, the ECA recommended that:

the administrative and on-the-spot checks be more rigorously conducted by the paying agencies and the quality of the Land Parcel Identification System databases be improved;

the guidelines issued by the Commission for implementing adequate control systems and compiling statistical reports be clarified and their implementation more strictly monitored;

the guidelines issued by the Commission to the certification bodies be amended to increase the size of samples of on-the-spot checks tested, require re-performance of checks, and verify more closely the compilation of statistical reports;

the Commission should re-examine the current reporting system that paying agencies are subjected to in order to ensure that it receives at the most appropriate time complete and relevant information that it could use in the discharge procedure. Additionally, the Commission should also increase the effectiveness of its desk and on-the-spot verifications of the Member States’ statistical reports;

the Commission take the necessary measures to arrive at a statistically valid estimate of irregularities in payments, based on the work of the paying agencies and the expanded role of the certification bodies provided that sufficient improvements take place in the work of those bodies.